Correlation Between Dupont De and Sun Country

Can any of the company-specific risk be diversified away by investing in both Dupont De and Sun Country at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dupont De and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dupont De Nemours and Sun Country Airlines, you can compare the effects of market volatilities on Dupont De and Sun Country and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dupont De with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Sun Country.

Diversification Opportunities for Dupont De and Sun Country

0.45

Correlation Coefficient

Dupont De  Sun Country

Very weak diversification

The 3 months correlation between Dupont and Sun is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Dupont De is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dupont De Nemours are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Dupont De i.e., Dupont De and Sun Country go up and down completely randomly.

Pair Corralation between Dupont De and Sun Country

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.52 times more return on investment than Sun Country. However, Dupont De Nemours is 1.93 times less risky than Sun Country. It trades about 0.01 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.04 per unit of risk. If you would invest  7,625  in Dupont De Nemours on December 27, 2024 and sell it today you would earn a total of  24.00  from holding Dupont De Nemours or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Sun Country Airlines

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Sun Country Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dupont De and Sun Country

The main advantage of trading using opposite Dupont De and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Sun Country can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sun Country will offset losses from the drop in Sun Country's long position.

The idea behind Dupont De Nemours and Sun Country Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.